Fintech Web 2.5 : Digital Identity

4 min readDec 22, 2022


Saying the word crypto in many circles will get a visceral reaction and if you say, you still deeply believe in the future of crypto, you have a high likelihood of being blacklisted.

I mean, I get it. It has been a tumultuous 9 months. At this exact time last year, the Bitcoin Market cap was at ~ $919B, and today we are at ~$321B. Bitcoin the OG of cryptocurrency and perceived by most as a storage of value has lost 65% of its worth. That’s not insignificant. With ETH, BNB, MATIC, and SOL respectively losing 68%, 54%, 70%, and 93% of their value YTD. And yes, I still use Yahoo Finance because after all I am a freshly minted MBA, and it offers easy data comparison tools that are hard to match. (I personally think there is also a huge opportunity to have better data analytics tools for crypto but that’s a topic for another time.)

2021–2022 YTD Selected Crypto Currency Market Cap

Then to top everything off, crypto darlings Three Arrows Capital, Voyager Digital, Celsius Network, FTX, and BlockFi have toppled in the last three quarters of the year. There have been crypto casualties left and right, including myself.

The future of crypto looks grim

But with all of that I still deeply believe in crypto and the underlying blockchain technologies that are enabling a decentralized world.

Before diving back into the deep end of the crypto pool because I believe there needs to be a market correction, regulatory oversight for anything that touches a retail investor, and most importantly weeding out the bad actors who don’t have personal or business ethics — I’m going to swim in the shallow end where there are massive opportunities to use blockchain technologies that are solving real tangible problems for fortune 500 companies.

Because I love fintech and crypto, I’m going to drive into what I call “fintech web 2.5” companies that are solving problems for financial institutions with massive TAMs by leveraging blockchain technologies.

Fintech Web 2.5 : Digital Identity

One area where fintech web 2.5 companies are well positioned to support financial institutions (FI) is with digital identity verification and management of users.

Digital Identity

The current solution requires financial institutions to constantly verify user identity, store identity credentials, and adhere to security and compliance standards. At every point of the current solution, FIs are faced with high costs, and users experience latency while onboarding leading to frustration and customer churn.

Blockchain-based digital identity solutions show the power to replace traditional identification systems like Berbix, Onfido, and Authenticate, because frankly, these solutions aren’t cutting it anymore.

Customers go through the KYC process one time and store their verified credentials on chain allowing FIs to verify an identity in two clicks. By leveraging blockchain technologies, and zero-knowledge proofs, FIs cut cost, turnover, and increase security, and most importantly provide a better user experience for their customers.

Market Drivers

The market drivers behind this are changes in consumer and enterprise behavior, regulatory shifts, and market growth.

  1. The shift from federated to self-sovereign identity verification allows users to own their data and control who has access. We are seeing this shift happen around the US with more than 20 states collaborating with Apple to store their driver’s licenses on their phones.
  2. Regulatory support for open banking which was most recently encouraged by US CFPB Director Rohit Chopra’s remarks at Money2020. Open Banking Initiatives around the world, especially in the UK and more broadly Europe have resulted in decreased costs for fintechs to access consumer data, decreased costs of consumers, and increased industry competition and consumer choice. Now I think the US is next.
  3. Massive market growth in the digital identity verification space. Projected growth to $115B in 2026 with FIs accounting for almost 62% of the spend.

Digital Identity Innovator

My favorite company in the digital identity space leveraging blockchain technologies is Portabl.

Portabl works as a native solution that also integrates directly within a FI’s platform to onboard and authenticate users. The power of Portbl it uses digital identifiers (DIDs) and verifiable credentials (VC) (widely accepted in decentralized identity) to document proof of the transaction on chain and store the encrypt data off chain. Portabl decreases the costs of onboarding new users and reverifying existing users, increases security through credentialing, allows for data ownership to reside with the users, and makes the onboarding process easy and painless.

Portabl is an investment that I sourced for my previous fund that is now part of their portfolio. Since the investment, I have deepened my conviction in the team, product, and GTM.

Team: Portabl’s team of digital identity experts, FI veterans, and web2 and web3 native technical devs has the technical and industry expertise to build and scale the company into a market leader.

Product: Unlike other blockchain identity solutions, Portabl is building a novel product with an intuitive and seamless frontend experience.

Portabl’s product experience for users

GTM: Portabl’s GTM strategy is focused on onboarding FIs to use their digital identity verification, compliance automation, and user interoperability and privacy products. As Portabl onboards more FIs, they will verify more users on chain making the user experience easier when users create accounts with other FI partners. Portabl’s GTM strategy creates a power flywheel effect for customer acquisition.

Next, I’ll dig into how fintech web 2.5 companies are well-positioned to both SUPPORT and DISRUPT financial institutions (FI) with payments.

What are other ways you think blockchain-enabled companies can support and disrupt the financial services industry? Let me know in the comments!




NYC-based, Columbia MBA, Founder, Latina obsessed with entrepreneurship and all things VC